CECIL’S CYCLING SUPPLIES

Company Information

CECIL’S CYCLING SUPPLIES is a small business selling bikes. It is located at221 Waterloo Road Burwood, which is a rented property, and the rent is normallypaid monthly in advance.
The business is owned and managed by Cecil Sessile andhis family. The business structure is a proprietary limited company, with 25,000issued and paid up shares at $2 per share.The business sells bikes for cash and credit. Cecil offers credit on terms 2/10, n/30.The credit rating for each customer is checked before the goods are sold. Deliverycharges are built into the price of the products sold.All purchases are made on credit. Cecil tries to pay all suppliers within the givencredit terms so that no interest charges are incurred.It is not expected that there will be any increases in prices either from the supplier orto the customer during the period.The business offers 4 lines of bike for sale – Basic, BMX, Mountain and Racingbikes.
The stocks of bike are held in a warehouse at the rear of the shop so that a closeeye can be kept on the movement of each line.The business has an overdraft facility at the Bank of $40,000, which has beenarranged so that suppliers can be paid on time. The company also has a loan of$30,000 on which it pays only interest. The interest payable is 15% per annum,payable monthly in arrears.The annual insurance policy was taken out on 1stAugust 2011 at an annual cost of$2,640.The financial records of the business are maintained on QuickBooks Premier Version19, but Cecil is not convinced that the software is producing accurate figures. As such,Cecil has decided to also maintain a manual set of accounting records so as to providea check of the computer-based accounting records.

Additional Information at 30thNovember 2011
1. Depreciations to be charged for November are as follows:Motor Vehicles on the reducing balance method at 22.5% per annum;Furniture & Fittings on the straight line method at 10% per annum, with noresidual value;Office Equipment on the straight line method at 20% per annum, with noresidual value.
2. The employees are paid $4,650 per fortnight for working Monday-Friday, so10 working days per fortnight. Salaries are paid on 10thand 24thNovember,because the fortnight ended on these days. You need to allow for any unpaidsalaries at the end of the month (30thNovember 2011).
3. Office Supplies on hand at 30thNovember 2011 were $1,470.
4. Estimated telephone payable and electricity payable at 30thNovember 2011were as follows: - Telephone Payable $240, Electricity Payable $145.
5. Dyson’s Racing Shop advised Cecil’s Cycling Supplies on 30thNovember2011 that it was going into Administration (i.e. Company bankruptcy) and thatas a result they would not be able to pay the balance owing. http://www.ukthesis.org/Essay_Writing/ Cecil’s CyclingSupplies uses direct write-off method for uncollectable accounts.
6. Cash was received for a further 5,000 shares on 30thNovember 2011. Theshares are issued at $2 per share.#p#分页标题#e#
7. Office Equipment which had been purchased for $2,300, with accumulateddepreciation of $920 at 30thNovember is sold on November 30thfor $1,500cash. (Note: $920 includes the depreciation expense for November).
8. The stocktake on 30thNovember 2011 revealed the following inventory items:Basic Bike Qty = 71BMX Bike Qty = 32Mountain Bike Qty = 28Racing Bike Qty = 8Account for any inventory losses.
9. A check of the bank statement at 30thNovember 2011 revealed bank chargesof $82 debited to the account that have not been accounted for.
10. Estimated tax payable at 30thNovember 2011 is $7,074.
11. Any other adjustments that you believe relevant should be made. E.g.advertising, insurance, etc.